Professional Documents
Culture Documents
Test Bank For Fundamental Accounting Principles Canadian Canadian 14Th Edition by Larson Isbn 1259066509 9781259066504 Full Chapter PDF
Test Bank For Fundamental Accounting Principles Canadian Canadian 14Th Edition by Larson Isbn 1259066509 9781259066504 Full Chapter PDF
Test Bank For Fundamental Accounting Principles Canadian Canadian 14Th Edition by Larson Isbn 1259066509 9781259066504 Full Chapter PDF
02
Student:
3. A list of all accounts used by a company, including the identification number assigned to each account, is
called a:
A. Ledger.
B. Journal.
C. Trial balance.
D. Chart of accounts.
E. General Journal.
4. The following accounts appear on either the Income Statement (IS) or Balance Sheet (BS). In the space
provided next to each account write the letters, IS or BS, that identify the statement on which the account
appears.
5. Put the steps of the accounting cycle in the correct order:
Adjust
Analyze transactions
Close
Journalize
Post
Prepare adjusted trial balance
Prepare post-closing trial balance
Prepare statements
Prepare unadjusted trial balance
6. Identify each of the following accounts as a revenue, expense, asset, liability, or equity by placinginitials
(R, E, A, L or E) in the blanks.
(1) Rent Expense
(2) Cash
(3) Equipment
(4) Owner, Capital
(5) Fees Earned
(6) Accounts Receivable
(7) Accounts Payable
(8) Owner, Withdrawals
(9) Supplies
(10) Unearned Revenue
(11) Prepaid Insurance
(12) Sales
8. A $130 credit to Office Equipment was credited to Sales by mistake. By what amounts are the accounts
under- or overstated as a result of this error?
A. Office Equipment, understated $130; Sales, overstated $130.
B. Office Equipment, understated $260; Sales, overstated $130.
C. Office Equipment, overstated $130; Sales, overstated $130.
D. Office Equipment, overstated $130; Sales, understated $130.
E. Office Equipment, overstated $260; Sales, understated $130.
9. Jelly's Grocery Store showed the following account balances at the end of 2015:
If all of the accounts have normal balances, what are the totals for the trial balance?
A. $86,000.
B. $119,600.
C. $127,600.
D. $186,600.
E. $255,500.
10. Of the following errors, which one by itself will cause the trial balance to be out of balance?
A. A $200 salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense.
B. A $100 receipt from a customer in payment of his account posted as a $100 debit to Cash and a $10
credit to Accounts Receivable.
C. A $75 receipt from a customer in payment of his account posted as a $75 debit to Cash and a $75
credit to Cash.
D. A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to
Cash.
E. All of these errors will cause the trial balance to be out of balance.
11. If the Debit and Credit column totals of a trial balance are equal, then:
A. All transactions have been recorded correctly.
B. All entries from the journal have been posted to the ledger correctly.
C. All ledger account balances are correct.
D. The total debit entries and total credit entries in the ledger are equal.
E. No sliding or transposition errors have been made.
12. The purchase on credit of a delivery truck for $9,600 was posted to Delivery Trucks as a $9,600 debit and
to Rent Expense as a $9,600 debit. What effect would this error have on the trial balance?
A. The total of the Debit column of the trial balance will exceed the total of the Credit column by$9,600.
B. The total of the Credit column of the trial balance will exceed the total of the Debit column by$9,600.
C. The total of the Debit column of the trial balance will exceed the total of the Credit column by
$19,200.
D. The total of the Credit column of the trial balance will exceed the total of the Debit column by
$19,200.
E. The total of the Debit column of the trial balance will equal the total of the Credit column.
13. In which of the following situations would the trial balance not balance?
A.A $1,000 collection of an account receivable was incorrectly posted as a debit to Accounts Receivable
and a credit to Cash.
B. The purchase of office supplies on account for $3,250 was incorrectly recorded in the journal as
$2,350.
C. $50 cash receipt for the performance of a service was not recorded.
D. The purchase of office equipment for $1,200 was posted as a debit to Office Supplies.
E. The payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash
for $750.
14. If, on a trial balance, the total of the debits is $7,500 and the total of the credits is $7,419, the difference
could have been caused by:
A. An error in copying an account balance from the ledger to the trial balance.
B. A transposition error.
C. A sliding error.
D. Posting only one side of an entry.
E. All of these answers are correct.
15. A $15 credit to Sales was posted as a $150 credit. By what amount is Sales out of balance?
A. $150 understated.
B. $135 overstated.
C. $150 overstated.
D. $15 understated.
E. $135 understated.
16. While in the process of posting from the journal to the ledger, the accountant for X Company failed to
post a $50 debit to the Office Supplies account. The effect of this error will be as follows:
A. The Office Supplies account balance will be overstated.
B. The trial balance will not balance.
C. The error will overstate the debits listed in the journal.
D. The total debits in the trial balance will be larger than the total credits.
E. This error will not make any difference.
18. Zen Hatha opened an art gallery and during a short period as a dealer completed these transactions:
What was the total of the debit balances shown in the trial balance prepared after these transactions were
posted?
A. $152,300.
B. $167,700.
C. $173,950.
D. $181,900.
E. $243,620.
19. A summary of the ledger that lists the accounts and their balances, in which the total debit balances
should equal the total credit balances, is called a(n):
A. Account balance.
B. Trial balance.
C. Ledger.
D. Chart of accounts.
E. General Journal.
20. Eli opened a new business by investing the following assets: cash, $6,000; land, $30,000; building,
$100,000. Also, the business will assume responsibility for a note payable of $22,000. Eli signed the note
as part of his payment for the land and building. Which journal entry should be used on the books of the
new business to record the investment by Eli?
A.
B.
C.
D.
E.
21. Green's Book Store purchased a new automobile that cost $25,000, made a down payment of $4,000, and
signed a note payable for the balance. The entry to record this transaction is:
A.
B.
C.
D.
E.
22. Welder Company purchases supplies from Plumber Company on account. The entry for this transaction
will include a:
A. Debit to Accounts Payable for Welder Company.
B. Debit to Accounts Receivable for Welder Company.
C. Debit to Accounts Receivable for Plumber Company.
D. Credit to Accounts Payable for Plumber Company.
E. Credit to Accounts Receivable for Welder Company.
23. The most flexible type of journal that can be used to record any kind of transaction is called a:
A. Ledger.
B. Trial balance.
C. Chart of accounts.
D. General Journal.
E. Balance column account.
27. During the month of November, Cornish Company had cash receipts of $3,500 and paid out $1,000 for
expenses. The November 30th cash balance was $4,300. What was the cash balance on November 1?
A. $1,800.
B. $2,800.
C. $4,300.
D. $5,800.
E. $7,300.
28. A credit entry:
A. Increases asset and expense accounts, or decreases liability, equity, and revenue accounts.
B. Is recorded on the left side of a T-account.
C. Decreases asset and expense accounts, or increases liability, equity, and revenue accounts.
D. Decreases asset, expense and revenue accounts.
E. Increases the withdrawals account.
29. On May 31, Don Company had an Accounts Payable balance of $57,000. During the month of June,
total credits to Accounts Payable were $34,000, which resulted from purchases on credit. The June 30
Accounts Payable balance was $32,000. What was the amount of payments made during June?
A. $32,000.
B. $34,000.
C. $57,000.
D. $59,000.
E. $84,000.
30. A liability created by the receipt of cash from customers in payment for products or services that have not
yet been delivered to the customers is:
A. Recorded as a debit to an unearned revenue account.
B. Recorded as a debit to a prepaid expense account.
C. Recorded as a credit to an unearned revenue account.
D. Recorded as a credit to a prepaid expense account.
E. Not recorded in the accounting records.
31. An asset created by a payment for economic benefits that does not expire until some later time is:
A. Recorded as a debit to an unearned revenue account.
B. Recorded as a debit to a prepaid expense account.
C. Recorded as a credit to an unearned revenue account.
D. Recorded as a credit to a prepaid expense account.
E. Not recorded in the accounting records.
32. Of the following accounts, the one that normally has a debit balance is:
A. Accounts Payable.
B. Accounts Receivable.
C. Ted Neal, Capital.
D. Sales Revenue.
E. Unearned Revenue.
33. Of the following accounts, the one that normally has a credit balance is:
A. Cash.
B. Office Equipment.
C. Sales Salaries Payable.
D. Ted Neal, Withdrawals.
E. Sales Salaries Expense.
34. Which of the following statements is incorrect?
A. The normal balance of the accounts receivable account is a debit.
B. The normal balance of the owner's withdrawals account is a debit.
C. The normal balance of an unearned revenues account is a credit.
D. The normal balance of an expense account is a credit.
E. The abnormal balance of a revenue account is a debit.
46. A place or location within an accounting system in which the increases and decreases in a specific asset,
liability, or equity item is recorded and stored is called a(n):
A. Journal.
B. Ledger.
C. Trial balance.
D. Account.
E. Chart of accounts.
47. An account used to record the owner's investments in the business plus any more or less permanent
changes in the equity is called a(n):
A. Withdrawals account.
B. Capital account.
C. Asset account.
D. Expense account.
E. Revenue account.
48. The account sometimes referred to as the owner's personal account or drawing account is called a(n):
A. Revenue account.
B. Withdrawals account.
C. Capital account.
D. Expense account.
E. Liability account.
49. A trial balance that is in balance is proof that no errors were made in journalizing the transactions, posting
to the ledger, and preparing the trial balance.
True False
50. If an account was incorrectly debited for $300 instead of correctly credited for $300, the account is out of
balance by $300.
True False
51. If an error is discovered in either the journal or the ledger, it must be corrected by erasing the incorrect
amount and entering the corrected amount.
True False
52. The accounting cycle begins with:
A. Preparing financial statements and other reports.
B. Analysis of economic events and recording their effects.
C. Posting to the ledger.
D. Presentation of financial information to decision makers.
E. None of these answers is correct.
53. Posting is the process of copying the debit and credit amounts from a journal to the ledger accounts.
True False
54. Since all figures are eventually posted to the ledger, the posting reference column in a journal is not
necessary.
True False
55. Unearned revenues are:
A. Revenues that have been earned and received.
B. Revenues that have been earned but not yet collected.
C. Liabilities created by advance cash payments from customers for products or services.
D. Recorded as an asset in the accounting records.
E. Increases to owners' equity.
56. The following transactions occurred during July for Hurley Services:
57. An abnormal balance in an account refers to a balance on the side where decreases are recorded.
True False
58. The trial balance is a list of the accounts that have balances in the ledger.
True False
59. Step Two of the accounting cycle requires that we record transactions in a record called a journal.
True False
60. If a company sells products and receives from the customer a formal written promise to pay a definite
sum of money on demand or on a defined future date (or dates), the seller should debit the promised
amount to Accounts Receivable.
True False
61. A transaction that decreases an asset account and increases a liability account must also affect another
account.
True False
62. When a business sends a bill for $200 to a customer for services rendered, the journal entry to record this
transaction will include a $200 credit to Accounts Receivable.
True False
63. A transaction that increases an asset account and decreases a liability account must also affectanother
account.
True False
64. A credit purchase of a business expense item should be recorded with a debit to an expense account and a
credit to Accounts Payable.
True False
65. If a company purchases land, paying part with cash and issuing a note payable for the balance, the journal
entry to record this transaction will include a debit to Cash.
True False
66. Prepaid Insurance is an expense account which is used for recording expenses that have been paid in
advance.
True False
67. Because they decrease equity, withdrawals made by a business owner are credited to his/her withdrawals
account.
True False
68. Asset accounts normally have credit balances and expense accounts normally have debit balances.
True False
69. The normal balance of an account refers to the debit or credit side where increases are recorded.
True False
70. The chart of accounts is a list of all the accounts used by a company.
True False
71. Purchasing supplies on credit increases assets while decreasing liabilities.
True False
72. Credits to accounts are always increases.
True False
73. To credit an expense account means to decrease it.
True False
74. Increases in liabilities are recorded as debits.
True False
75. Debits to accounts are normally decreases.
True False
76. All increases and decreases in cash are not necessarily recorded in the Cash account.
True False
77. A revenue account normally has a debit balance.
True False
78. Double-entry accounting means that every transaction affects and is recorded in at least two accounts.
True False
79. Debits increase asset and expense accounts.
True False
80. The accounting equation can be expressed as liabilities = assets - equity.
True False
81. In a double-entry accounting system, total debits must always equal total credits.
True False
82. The left side of a T-account is always the credit side, while the right side is always the debit side.
True False
83. The accounting equation is expressed as assets = liabilities - equity.
True False
84. A T-Account is a formal account frequently used in business.
True False
85. An account balance is the difference between the increases and decreases recorded in an account.
True False
86. Cash withdrawn by the owner of an unincorporated business in the form of a monthly salary should be
treated as an expense of the business.
True False
87. When a company sells services for which cash will not be received until some future date, the company
should credit an unearned revenues account for the amount charged to the customer.
True False
88. To make it easier for the bookkeeper, the cost of land is separated from the cost of buildings located on
the land.
True False
89. Unearned revenues are assets, because a service or product is owed to the customer.
True False
90. Withdrawals are a type of transaction that affects equity.
True False
91. A building is an example of an asset that does not provide any benefit to its owner.
True False
92. A ledger is a type of account.
True False
93. Goods sold on credit to customers are called accounts payable.
True False
94. As prepaid assets are used up, the costs of the assets become expenses.
True False
95. The first step in the accounting cycle is transaction analysis.
True False
96. An account is a detailed record of increases and decreases in a specific asset, liability or equity item.
True False
97. A compound journal entry is:
A. A journal entry that has three or more debits and three or more credits.
B. A journal entry that affects at least three accounts.
C. A journal entry that affects at least four accounts.
D. A journal entry involving at least two accounting periods.
E. A journal entry involving only two ledger accounts.
PLATE III
The Australian’s mouth is decidedly large, and his lips full. The
latter, especially of the children, are as often as not becomingly
arched and furnished with a shapely philtrum.
If we were to look into the mouths of a number of aboriginals we
would find considerable individual differences in the configuration of
the vault. In some instances the roof would appear high and arched,
in others low and flat. If, further, we extended our observations in the
direction of any differences which might exist in the individual faculty
of articulated speech, relative to the variations in height already
noted, our efforts would be fruitless. It is very doubtful whether any
such connection between the height of the mouth and freedom of
tongue or speech does exist in the aboriginal’s case. But it has been
rightly pointed out that the hard palates of fossil skulls are flatter than
they are in those of modern races.
Perhaps the finest natural gift of the Australian (and the same was
true of the Tasmanian) is his strong set of ivory white teeth. In the
primitive tribes, living apart from civilization, dental disease or caries
is practically unknown. A common feature, however, is that the teeth
are ground down on a level, to varying extents, depending upon the
age of the individual examined. In many cases, the biting and
grinding surfaces of the teeth have been worn to almost the alveolar
or gum-level of the jaws, leaving only the roots with short truncated
stumps to do the mastication.
This excessive wear of healthy teeth is mainly attributable to the
large quantities of sand contained in the everyday diet. The
aboriginal cooks nearly all his meals in hot ashes and sand; it is
unavoidable, therefore, to include an appreciable quantity of gritty
material in the articles which are consumed. The aboriginal,
furthermore, during the course of a meal, might repeatedly call upon
the strength of his teeth, as an easy way of crunching bones of
animals, and shell of molluscs and crabs, and many other things.
Casually one might take notice of the fact that the teeth of the fossil
of Gibraltar are worn in the same remarkable way.
An aboriginal does not take any particular care of his teeth, with
the exception that after every meal, some considerable time is
devoted to the removal of any remnants of meat which may have
been retained. For this purpose, the dry seed-stalks of grass and
small twigs are generally used. The old Kukata men were observed
to possess permanent tooth-picks, consisting of short pieces of wood
sharpened at one end. For convenience sake, they carried these,
planted in their shaggy beards.
Should there be an aching tooth to cure, the native does it by
heating the point of a small stick in a fire and inserting it into the
cavity which is causing the trouble.
A most interesting circumstance in connection with the dentition of
the Australian is the comparatively frequent occurrence of a fourth
molar in the jaws. We know that in European subjects the third molar
or wisdom tooth is smaller, and takes longer in coming to the surface
than the other molars; its development is certainly on the down-
grade with our kind; but the third molar of the aboriginal is strong and
lasting.
PLATE IV